MCQ
Learning outcomes
At the end of this class you should be able to:
Know more about the CIPD
Know where to get UAE Labour Law Information
Link reward to the external market and understand what a market rate analysis entails.
Understand the virtuous cycle and how strategic planning can be incorporated
Critically evaluate the concept equal pay and understand how it ties in with the Equal Pay Act.
Know about the new UAE Equal Pay Law (introduced in Sept 2020)
Apply the principles of fairness in reward practices.
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CIPD GUEST LECTURE
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Manon Hazell
Marketing Manager - CIPD Middle East
Chartered Institute of Personnel and Development
Dubai, UAE
O: +971 4 275 6907
Ministry of Human Resources and Emiratisation (MoHRE) in the UAE
Proposing and supervise implementation of federal laws, regulating labour affairs
manage the job market
proposing labour policies well-suited to the UAE
seeks to establish stability in the market, increase productivity, and create jobs.
drafting the general Emiratisation policy to include more Emirati citizens in the job market
conducting field and administrative studies analysing the job market
provide career advice and consultancy to Emirati manpower
conducting follow-ups and evaluations of the Emiratisation process in the private sector
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Ministry of Human Resources and Emiratisation
https://www.mohre.gov.ae/ar/laws-legislation/labour-law.aspx
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Data comparisons
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| Total Reward = Financial + Non-Financial Reward |
Basic Pay
Bonuses
Benefits
Allowances
Pay Scales
Total Pay or Cash
Total Compensation (Remuneration)
On target earnings
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HR ORG CHART Central HR Office
i.e. Traditional public (state) sector organisations in UK and UAE -
Pay policies and decisions made centrally at the organisation’s headquarters.
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Hay Job Evaluation Method
Systematic reward policy/process for ranking jobs logically and fairly
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Hay Job Evaluation Method
The Hay Group Guide Chart Profile method of job evaluation was developed in the early 1950s by Edward N. Hay and Dale Purves.
It is based on the notion that jobs can be measured on the basis of their relative contribution to the overall objectives of the organisation.
Carried out in a series of steps within any organisation which chooses to use the method that jobs can be assessed by:
know-how - The knowledge required to do the job
problem solving - The analytical ability needed to solve common problems
Accountability - The responsibilities assigned; and
The working conditions associated with the job.
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Hay Job Evaluation Method
This methodology is known as a points factor system.
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Hay Job Evaluation Method
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Hay Job Evaluation Method
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Hay Job Evaluation Method
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analysing what is the:
value that is created (accountability)
how it is created (problem solving); and
what the job requirements are that the job holder has to meet in order to deliver the value (know-how)
The additional factors are (a) physical strain or effort (b) working environment.
Hay Job Evaluation Method
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Hay Job Evaluation Method Categories Look through your 1 handout
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Know How
Depth and range of Know-How. The requirement for Know-How in practical procedures, specialised techniques, professional or scientific disciplines.
Planning and organising i.e. the requirement for planning, organising, coordinating, directing, executing and controlling over time.
Communicating and influencing, i.e. the skills needed to communicate with and influence individuals and groups, within and outside the organisation to achieve results.
Hay Job Evaluation Method Categories
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Problem Solving
Thinking environment, which assesses the extent to which thinking is determined by its context (sector environment, organisation policies, guidelines, procedures or even rules, etc.)
Thinking challenge, which assesses the complexity of the problems encountered and the extent of original thinking needed to arrive at conclusions
Hay Job Evaluation Method Categories Look through your handout on Unihub
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Accountability
Freedom to act, which assesses the absence or presence of discretion in making decisions or taking action. It combines this with the extent to which decisions and actions are scrutinised or checked and the length of time before the consequences of those actions are likely to become apparent.
Nature of impact is concerned with the type of impact that the role has on objectives or outputs. It is measured on a 4 level scale comprising R (Remote), C (Contributory), S (Shared) and P (Prime).
Area of impact, which gauges how much of the organisation the job has the defined degree of impact on.
Indeterminate/Individual (Not-quantified) area of impact Some roles are evaluated at 0 area of impact and a nature of impact letter (A, B, C or D) allocated.
Linking reward to the external market
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What is market rate analysis referring to?
Conducted through surveys that produce data on levels of pay and benefits for similar jobs in comparable organisations.
Market rate analysis aims to:
Obtain relevant, accurate and representative data on market rates
Compare like for like (i.e. data, region, market rates)
Obtain up to date information
Interpret data to determine the nature of the actions to be taken
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What would be the point?
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Where do you find market data?
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| Reward information | Valid | Less valid | |
| 1 | Surveys | ||
| 2 | Consultant’s database | ||
| 3 | Journal data | ||
| 4 | Informal networks | ||
| 5 | Job advertisements | ||
| 6 | Recruitment and leaver interviews | ||
| 7 | Recruitment agencies |
Then think about the following:
How does your organisation research and analyse markets rates?
How valid is this data?
How valid is the above?
Paid for reward data on the internet
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| Pay databases at a cost: | |
| 1 | Hay Group |
| 2 | Croner |
| 3 | Willis Tower Watson |
Free reward data on the internet
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| Pay databases available to you: | |
| 1 | XpertHR |
| 2 | CIPD |
| 3 | e-Reward |
| 4 | Public sector websites |
| 5 | Recruitment agency websites e.g. Reed |
| 6 | Payscale.com |
External market comparisons – how do we know how much to pay our employees?
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| External market comparisons | |
| 1 | Business competitors |
| 2 | Local competitors |
| 3 | Job and occupational data |
| 4 | Local, national and international |
| 5 6 | Employers of choice Recruitment agencies |
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Location allowances
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| Location allowances | |
| 1 | Broad geographic London Weighting averages GBP4k varies across employers, house prices, rentals, deposits. WHAT ABOUT THE UAE? |
| 2 | Hot spot (a particular area where businesses are/people live) to solve recruitment problems |
| 3 | Built into pay spines e.g. inner and outer spines for teachers. WHAT ABOUT THE UAE? |
Examples of location allowances in Dubai?
London:
Cost of living 20% more expensive than anywhere else in UK
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London Weighting
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Currently, London Weighting averages under £4,000 (AED20,298 approx.) and varies significantly across employees and different industries, with more paid in Inner London than Outer London; and more in finance, manufacturing and public sectors than retail or the not-for-profit sectors (Trust for London, 2020).
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National Minimum/Living Wage UK from 1 April 2021
Workers aged 23 and over - £8.91 (AED45.21) per hour (National Living Wage)
Workers aged 21-22 - £8.36 (AED42.42) per hour
Workers aged under 18 - £4.62 (AED23.44) per hour
Apprentice aged under 19 - £4.30 (AED21.82) per hour
More information is available at:
https://www.gov.uk/national-minimum-wage-rates
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National Minimum Wage UAE
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No minimum wage for expats in UAE
If a UAE national has no high school certificate, his or her salary should be no less than Dh3,000 per month.
In case of a salary rise you should be given a formal written notice of the same and the Labour Department has to be informed.
(Al Tamimi & Company, 2019)
Re-cap: Red Circling
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When an employee's rate of pay is above the maximum salary identified for the position, the employee is considered ‘red-circled.’
The employer failed to know the appropriate rate for the job and set a pay rate too high.
The market rate
The market rate for a job is normally expressed as:
Median salary literally means ‘Middle’ is the middle ranking salary
i.e. you will have 50 percent of the remaining salaries under that amount and 50 percent above that amount.
from lowest to highest, are AED20,000, AED30,000 and AED35,000.
Now if there are two middle figures: AED30,000 and AED33,000.
We need to average those two figures which we can do by adding them together (AED30,000+AED33,000) and dividing the sum by two (AED63,000÷2). The median is AED31,500.
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Which is the Median Salary?
Median Salary for an HR Business Partner:
AED20,000
AED22,000
AED24,000
AED28,000
AED30,000
AED60,000
AED65,000
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Which is the Median Salary?
Median (middle range) Salary for an HR Business Partner:
AED20,000
AED22,000
AED24,000
AED28,000
AED30,000
AED60,000
AED65,000
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Upper quartile salary
25% salaries above
75% below
Lower quartile salary
75% salaries above
25% below
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The market rate
The market rate for a job is normally expressed as:
And often
Upper quartile salary is the salary when 25% of surveyed salaries are above it and 75% below
And
Lower quartile salary is the salary when 75% of survey salaries are above it and 25% below
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Use of survey data
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General Pay Review UK and UAE
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How does your organisation review pay?
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General Pay Review UK and UAE Examples
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the increase is determined by an individual’s contribution or performance.
everyone gets the same percentage increase of salary.
the increase usually reflects the pay market and inflation
in the UK public/state sector, the increase is often negotiated with unions
a poor performer will not get a General Pay Review increase
https://www.ien.com/operations/video/21061399/porsche-workers-pocket-11k-bonuses March 2019
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BP OIL MARKETING
UK REWARD POLICY
BASE PAY COMPARED WITH THE LOCAL MARKET
RECRUIT AT 90% OF THE MEDIAN
HIGH PERFORMANCE LEADS TO 120% OF THE MEDIAN
BONUSES FOR HIGH PERFORMANCE
Using market data to set reward in an organisation
Overpaying is as bad as underpaying
Are you comparing like for like jobs/roles?
Surveys can be unreliable. Why?
Consider the whole reward package
Example: base pay, bonuses, salary scales etc.
Upper quartile positioning is difficult to achieve
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% of staff wanting to leave plotted against their perceived salary market position
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| Source: Watson Wyatt Survey 2004 |
| % Staff wanting to leave – Perceived salary market position |
How do you address these perceptions?
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What happens if one group of staff are in short supply and demand high pay?
Do nothing (for staff relations reasons, which are ..?)
Give a market supplement (possible consequences?)
Apply market pricing
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OR
OR
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A market supplement
An additional temporary payment to the basic salary of an individual job or specific group of jobs (grade related).
Where market pressures would otherwise prevent the company from being able to recruit or retain staff with a particular skill or group of skills.
It can be a defense against equal value claims but should be red circled
A temporary supplement may deter potential recruits
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Job Family Structure
£10,000
£20,000
£30,000
£40,000
£50,000
LEGAL
MARKETING
IT
FINANCE
£60,000
PAY
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
SUPERVISORY
ADMIN
PROFESSIONAL
MANAGERS
£70,000
Market pricing
Paying in line with the market and not using pay scales based on internal job evaluation or having market supplements.
Can apply to job families or individual roles
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Market pricing
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| Market pricing | |
| Advantages | Disadvantages |
| A simple idea | 1. Relies on accuracy of market data |
| Can give managers freedom to mange pay | 2. Staff who like regular pay increases can be demotivated |
| Appropriate if more external recruitment than internal | 3. Internal equity can suffer |
| 4. Potential for equal pay claims | |
| 5. Can deter staff moving between job families |
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British Telecom (BT) in 2005
Wanted to break away from company wide grading and pay scales
Employ a wide range of technical staff
Introduced job families and career paths
Introduced market pricing for every job
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Why is it important to consider International Reward?
The world is changing economically.
The Fortune 500 global list out of the top 500 companies in the world, 129 are Chinese. 20 years ago China only had 8 companies in the Fortune 500.
Some of the Top 10 largest banks in the world are:
The Industrial and Commercial Bank of China (ICBC)
China Construction Bank Corp
The Agricultural Bank of China
Bank of China Limited
HSBC Holdings (UK)
JP Morgan Chase (US bank)
BNP Paribas (France)
Mitsubishi (Japan)
Bank of America
Credit Agricole (France)
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What encourages staff to stay around?
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“While salary and bonuses might get people in the door, it is more likely to be culture and career progression that help people stick around in the long term.”
John Lamphiere, EMEA Managing Director at Glassdoor
https://www.cnbc.com/2019/05/23/glassdoor-research-25-highest-paying-companies-in-the-uk-2019.html
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Introduction to International Reward
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Introduction to International Reward
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As of July 2019, this is the list of the top 10 countries with the most Global 500 companies.
† The Global 500 includes Unilever under the heading "Britain/Netherlands", as the company is counted in the tally for both countries.
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Equal pay
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Reward Homework: Group Presentations International Reward (15 mins) 23 May, 2021 (in class)
1) See slides on MS Teams/Unihub: EQUALITY especially EQUAL PAY IN 6 DIFFERENT COUNTRIES
2) Prepare team presentation 15 mins to discuss your findings on points in slide:
Group 1 Group 2
India USA
China Germany
UK Japan
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